Business Service Centers NAICS 561431, 561439

Jun 12, 2025 - Struggling UPS Announces Major Job Cuts

• The United Parcel Service (UPS) announced plans to lay off about 20,000 workers as the package delivery company struggles with tariffs, automation, and increased competition. The job cuts, along with the closure of more than 70 facilities, comes on the heels of UPS ending its 30 year partnership with Amazon and reducing its handling of the e-commerce giant’s shipping business by 50% by mid-2026. Even though Amazon is UPS’s largest customer with about $10 billion in revenue in 2024, the partnership is not profitable. Amazon has built out its own competing delivery infrastructure and delivered more packages than UPS in 2024. In addition, cargo from China to the US makes up about 11% of UPS international business. The Trump administration’s tariffs on that country, along with the elimination of the de minimus exemption on small packages, increases UPS’s volume of parcels subject to customs.
• The United States Postal Service (USPS) announced new service standards that will affect the delivery of certain types of mail as the federal mail carrier looks to save $36 billion over the next ten years. The USPS lost $9.5 billion in 2024 and close to $100 billion since 2017. Beginning on April 1, 2025, first class mail will still be delivered within one to five business days, but will be delivered at 75% of its current rate, 14% at a faster rate, and 11% at a slower rate, depending on the length of travel. Deliveries of marketing and direct mail, packages, and periodicals will be shortened. In addition to the delivery changes, the Trump administration has floated firing the USPS board of governors and folding the Post Office into the Commerce Department. Such a move would cause a political firestorm and would be potentially illegal without Congressional approval.

• Last-mile delivery services received a shakeup in early 2025 when the United States Postal Service did not renew a contract with UPS SurePost, the parcel delivery company’s business economy service. For years, SurePost dropped off non-urgent packages from business shippers at USPS facilities for the last leg of the delivery journey. Teamster-backed UPS drivers will now handle SurePost packages all the way to customer doors. USPS gets to simplify its contractor network and UPS gets an increase in deliveries that the union hopes will offer members overtime opportunities. The move will increase costs for UPS - drivers now have to deliver to far-flung rural areas - and it is possible that the company will raise fees for SurePost services to compensate.
• The US office market posted higher net absorption in the third quarter, and vacancy rates remained steady, perhaps signaling that demand for office space has hit bottom and is back on the upswing, according to a recent report by the real estate firm CBRE. Net absorption in Q3 hit 4.3 million square feet – up about 87% from Q2 2024 – which marked the second consecutive quarter of increasing office space demand. Absorption also exceeded the 3.5 million square feet of new office space that came online in Q3 2024. The office vacancy rate in Q3 2024 was unchanged at 19%, a positive signal after nine quarters of rising vacancies. Third-quarter leasing activity decreased slightly from Q2 2024 but rose more than 11% over Q3 2023. Higher office occupancy could increase demand for business service centers.